Manny Pacquiao is now engaged in a fight that he cannot win. Unlike many of the bimbos that he conquered in the ring, the taxman is powerful and merciless in all countries, including the Philippines. The whole country is watching this new fight closely; as in his boxing bouts, the people are cheering him on.
And the champ is playing the underdog to the hilt. He said the freeze on his bank accounts is “harassment” and was caused by “politics.” Reading from a statement obviously prepared by a ghost writer, Pacquiao claimed that he had to borrow P1 million with which to buy relief goods for the typhoon survivors of Leyte because he could not withdraw even P1 from his bank accounts; that he did not steal his billions; and that he earned his money by receiving punches and sweating blood and tears. Poor Kim Henares, she is being pummeled in the media and public opinion.
But the issue is quite simple. Commissioner Henares of the Bureau of Internal Revenue is just trying to collect taxes from the billions of pesos that Pacquiao earned in purses, pay-per-view television shares, and endorsements and commercials. Pacquiao said that he had already paid taxes in the United States and that under a tax treaty with that country, the Philippine government can no longer collect taxes from him.
Very well then, said the BIR, show us your income tax return (ITR) in the United States.
The BIR waited two years for Pacquiao to present the document. After the long and fruitless wait, the BIR assessed his unpaid income and value-added taxes in the Philippines for 2008 and 2009 at P2.2 billion, including surcharges and interest. When Pacquiao did not contest the assessment, the BIR issued warrants of distraint and levy on his bank accounts to ensure payment, effectively freezing his bank accounts.
Last October, Pacquiao’s lawyers went to the Court of Tax Appeals but by then the warrants had become final.
Instead of the ITR that the BIR wants, Pacquiao showed a letter from his promoter, Bob Arum, saying that Pacquiao’s taxes had been paid in the United States.
We do not want any letter, said the BIR. Anybody can write a letter. Show us your ITR, which is the best proof of payment. That is not difficult to do.
Pacquiao said in his statement that the BIR is asking for the “original” of the ITR, which is filed in the Internal Revenue Service (IRS)—the American counterpart of the BIR—and which the US government would, of course, not give to anybody.
But the BIR is asking for, not the US government’s copy, but Pacquiao’s own copy. ITRs come in several copies. When a taxpayer files his ITR, he gives two copies to the tax collector, the rest he keeps for himself as proof of payment. That is also an original. That is what the BIR is asking for. It is very easy to present that if you have one, di ba? So why hasn’t Pacquiao shown it to the BIR for the last two years?
Without it, the BIR naturally suspects that he did not pay taxes in the United States. (For all the money he is paying them, Pacquiao’s manager, lawyers and accountants are not serving him well.)
Last Wednesday, Pacquiao showed reporters in General Santos City copies of his US tax returns for the years 2008 and 2009. Yun pala, why does he not show these to the BIR and get it over with? If the BIR is satisfied that the documents are genuine, it will withdraw its freeze order on Pacquiao’s bank accounts.
Poor BIR, it is being damned for doing what it is supposed to do—collect taxes. If the media and the public learn that somebody did not pay the correct taxes and the BIR did not try to collect from him, it would be damned. Now that it is trying to collect from somebody who happened to be Pacquiao, the boxing champion idolized by the Filipino masses, it is also being damned. It is a case of damned if you do, and damned if you don’t.
“Why am I being singled out?” Pacquiao cried.
But he is not being singled out. The BIR is also going after other celebrities who are earning millions, movie stars particularly. At least two movie stars have been sued by the BIR for nonpayment of the correct taxes.
“Harassment! Politics!” wailed Pacquiao, echoing the common excuse of politicians.
Pacquiao is not a political kingpin who is being harassed. While his career in Congress is more than mediocre, the people of Saranggani still reelected him and even elected his wife Jinkee as vice governor. That is not harassment; that is condonation.
The admiration of the Filipino masses that Pacquiao enjoys may have spoiled him. He has begun believing that he can get away with anything, including not paying the correct taxes.
The problem of boxers with the taxman is not unique to Pacquiao. Other boxing greats who earned millions of dollars during their boxing careers have also been sucker-punched by the taxman. Joe Louis, the longest reigning heavyweight boxing champion of the world and the most admired, owed the IRS millions of dollars in unpaid taxes and was forced to come out of retirement to earn a few dollars more to be able to pay up. Mike Tyson is now bankrupt. Even the great Muhammad Ali had his problems with the IRS.
Boxers are not famous for managing their financial affairs. They leave that to their managers and hangers-on who suck up much of the money that they earned by giving and receiving punches. And many of these boxers who made millions wake up one day to find that the money is gone, that they are poor.
Let’s urge Manny Pacquiao not to let that happen to him.